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What The character does not matter nearly as much as what the internal Revenue Service thinks, and also the IRS position is crystal clear: Tips are taxable income.

So, when i transfer pricing don't tip the waitress, does she take back my cake? It's too late for that. Does she refuse to serve me any time I arrive at the restaurant? That's not likely, either. Maybe I won't get her friendliest smile, but That's not me paying for an individual to smile at everyone.

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But there end up being something telling in shortage of case law regarding subject. However of why someone leaves a tip, and this really represents payment for services rendered, might be one that the IRS would prefer not to use too fully. The Treasury might stand to lose increased than just one big way.

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